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Gas Tankless Water Heaters Market

The market for Gas Tankless Water Heaters was estimated at $1.5 billion in 2024; it is anticipated to increase to $2.4 billion by 2030, with projections indicating growth to around $3.6 billion by 2035.

Report ID:DS1501018
Author:Swarup Sahu - Senior Consultant
Published Date:
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Consumer Goods
Consumer Electronics
Gas Tankless Water Heaters
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Report Summary
Market Data
Methodology
Table of Contents

Global Gas Tankless Water Heaters Market Outlook

Revenue, 2024

$1.5B

Forecast, 2034

$3.3B

CAGR, 2025 - 2034

8.3%

The Gas Tankless Water Heaters industry revenue is expected to be around $1.6 billion in 2025 and expected to showcase growth with 8.3% CAGR between 2025 and 2034. This significant expansion in the Gas Tankless Water Heaters market can be attributed to a myriad of factors, such as accelerating demand for energy-efficient appliances, rising environmental concerns, and insistence on reducing utility costs. As the world grapples with energy scarcity and the effects of climate change, the importance of gas tankless water heaters - which offer high efficiency and considerable energy savings - has never been more pronounced. Emerging regulatory policies favoring green appliances have also contributed to this surge, with the introduction of incentives and subsidies providing a substantial boost to theindustry'sdevelopment.

Gas Tankless Water Heaters operate on an on-demand principle, heating water only when required thereby eliminating the need for extended storage and consequent standby losses. These heaters high thermal efficiency, compact design, and longer lifespan compared to their traditional counterparts are features that have enhanced their adoption significantly. Major applications span across residential, commercial and industrial sectors, with the residential segment accounting for a lions share due to increasing consumer emphasis on energy efficiency and green building practices.

Gas Tankless Water Heaters market outlook with forecast trends, drivers, opportunities, supply chain, and competition 2024-2034
Gas Tankless Water Heaters Market Outlook

Market Key Insights

  • The Gas Tankless Water Heaters market is projected to grow from $1.5 billion in 2024 to $3.3 billion in 2034. This represents a CAGR of 8.3%, reflecting rising demand across Residential, Commercial, and Industrial.

  • Rinnai Corporation, Navien Inc., Rheem Manufacturing Company are among the leading players in this market, shaping its competitive landscape.

  • U.S. and Japan are the top markets within the Gas Tankless Water Heaters market and are expected to observe the growth CAGR of 6.1% to 8.7% between 2024 and 2030.

  • Emerging markets including India, Brazil and South Africa are expected to observe highest growth with CAGR ranging between 8.0% to 10.4%.

  • Transition like Increased Energy Efficiency is expected to add $104 million to the Gas Tankless Water Heaters market growth by 2030.

  • The Gas Tankless Water Heaters market is set to add $1.8 billion between 2024 and 2034, with manufacturer targeting Hospitality & Healthcare Application projected to gain a larger market share.

  • With

    energy efficiency revolution, and

    Rapid Urbanization and Infrastructural Development, Gas Tankless Water Heaters market to expand 122% between 2024 and 2034.

gas tankless water heaters market size with pie charts of major and emerging country share, CAGR, trends for 2025 and 2032
Gas Tankless Water Heaters - Country Share Analysis

Opportunities in the Gas Tankless Water Heaters

In an increasingly globalized world, strategic collaborations and partnerships with global brands offer a lucrative market for Gas Tankless Water Heaters. Manufacturers can also consider tying up with prominent construction and real-estate companies, offering these energy-efficient water heaters as a premium and sustainable solution in new constructions. This synergy can create a win-win situation, expanding the reach of Gas Tankless Water Heaters to a larger consumer base and promoting sustainable living. Market Expansion in Developing Countries

Growth Opportunities in North America and Europe

In the North American market, the adoption of gas tankless water heaters is escalating considerably due to increasing energy efficiency regulations and the rising desire for cost and energy saving solutions among consumers. The United States leads the market with a high demand for these appliances, propelled by favorable government incentives and increasing consumer awareness about the impact of conventional water heaters on the environment. The competitive landscape in this region is driven by premium quality and technologically advanced features offered by major players, with companies like Rheem Manufacturing and Rinnai Corporation setting the market trends. A significant market driver in this region is the rising number of smart homes, increasing the potential for smart gas tankless water heaters integrated with advanced technologies like IoT.
Europe represents another significant market for gas tankless water heaters, largely backed by burgeoning demand from countries like Germany, the United Kingdom, and France. Brought about by escalating awareness regarding energy conservation and strong policy support to promote energy-efficient appliances, the uptake of these heaters is seeing a steady rise. The European market is highly competitive, with key players including Ariston Thermo Group and Vaillant Group extensively focusing on product innovation, thereby enhancing customer preferences for feature-rich and high-performing heaters.

Market Dynamics and Supply Chain

01

Driver: Rising energy efficiency regulations and space-saving appliance demand accelerating tankless heater adoption

Two closely related growth factors are also driving demand for gas tankless water heaters. First, tightening energy efficiency regulations in residential and commercial buildings are also encouraging the replacement of conventional storage water heaters with high-efficiency tankless systems. Governments and utilities are also promoting lower standby energy losses and higher thermal efficiency, directly favoring on-demand gas water heating technologies. Second, increasing demand for space-saving appliances is also influencing purchasing decisions, particularly in urban housing, apartments, and retrofitting projects. Gas tankless water heaters offer compact wall-mounted designs that free up valuable indoor space while delivering continuous hot water. Technological improvements such as modulating gas burners, advanced heat exchangers, and smart temperature controls further enhance performance and reliability. Together, regulatory pressure and space optimization trends are also accelerating adoption across both new construction and replacement markets, strengthening long-term demand for gas tankless water heaters globally.
The growing need for reliable, high-volume hot water in commercial and light industrial settings is also a major standalone driver for gas tankless water heaters. Sectors such as hospitality, healthcare, food service, and fitness facilities increasingly require continuous hot water without downtime or storage limitations. Commercial-grade tankless systems meet these needs through modular and cascading installations that scale output efficiently. Advancements in load balancing, digital controls, and remote monitoring are also improving system reliability and reducing maintenance costs. This trend is also particularly strong in hotels, restaurants, and institutional buildings focused on energy management and operational efficiency. As service-oriented industries expand and upgrade infrastructure, demand for gas tankless water heaters continues to rise steadily.
02

Restraint: High upfront installation and infrastructure upgrade costs slow adoption in price-sensitive markets

High initial costs remain a major restraint for gas tankless water heaters, particularly in residential retrofits and small commercial settings. Beyond the unit price, installations often require gas line upsizing, upgraded venting systems, and electrical modifications, significantly increasing total project costs. For example, homeowners replacing conventional tank heaters may defer purchases due to installation expenses outweighing near-term energy savings. This impacts demand elasticity and slows replacement cycles, especially in emerging markets. As a result, revenue growth is constrained in cost-sensitive segments, and adoption is more concentrated in new construction or premium renovation projects.
03

Opportunity: Advancing Energy Efficiency

With the growing emphasis on energy conservation, the market for Gas Tankless Water Heaters presents a significant in advancing energy efficiency. The modern technological innovations in this industry are directed towards making these heaters more energy-efficient, reducing operational costs, and minimizing their carbon footprint. This primarily untapped market segment holds massive growth potential in the residential and commercial sectors. The narrative of conservation is now stronger than ever, and the Gas Tankless Water Heaters industry is well-positioned to take advantage of this shift in consumer behavior.
04

Challenge: Limited gas infrastructure availability and electrification trends reduce addressable market potential

Gas tankless water heater adoption is constrained in regions with limited natural gas infrastructure or strong policy-driven electrification initiatives. Many urban developments and new residential projects are shifting toward all-electric building designs, reducing compatibility with gas-based systems. For instance, local regulations restricting new gas connections directly limit future installation volumes. Additionally, rural and developing areas without reliable gas supply face adoption barriers despite demand for efficient hot water solutions. These dynamics reduce the overall addressable market, alter long-term demand forecasts, and intensify competition among manufacturers targeting shrinking gas-compatible customer segments.

Supply Chain Landscape

1

Materials Procurement

BHP BillitonRio Tinto
2

Component Production

Burner Systems InternationalSit Group
3

Assembly

RinnaiNoritz
4

Retail & Distribution

LowesHome Depot
Gas Tankless Water Heaters - Supply Chain

Use Cases of Gas Tankless Water Heaters in Residential & Commercial

Residential : Gas tankless water heaters are increasingly adopted in residential settings due to their ability to provide continuous hot water while reducing energy consumption. In this segment, indoor and outdoor whole-house gas tankless units are most commonly used, typically fueled by natural gas or propane. These systems heat water on demand, making them well suited for single-family homes and high-occupancy apartments where hot water usage is variable throughout the day. Key advantages include compact design, longer service life compared to storage heaters, and lower operating costs. Growing preference for energy-efficient home upgrades and space-saving appliances continues to support residential adoption.
Commercial : In commercial applications, gas tankless water heaters are widely used in hotels, restaurants, hospitals, gyms, and educational facilities where consistent and high-volume hot water demand is critical. High-capacity commercial-grade tankless systems, often installed in cascading or modular configurations, are most commonly deployed to ensure reliability and redundancy. These systems deliver rapid recovery rates and stable outlet temperatures, supporting simultaneous usage across multiple points. Their primary advantage lies in operational efficiency, as they reduce standby heat losses and optimize fuel consumption. Rising construction of commercial buildings and focus on reducing utility costs are key drivers in this segment.
Industrial : Industrial facilities utilize gas tankless water heaters for process-related hot water needs rather than domestic use. Heavy-duty industrial tankless systems are typically installed in manufacturing plants, food processing units, and chemical facilities where precise temperature control and continuous operation are required. These heaters support applications such as cleaning, sanitization, and process heating without the storage limitations of conventional systems. Their advantages include scalability, durability under demanding conditions, and improved energy efficiency in continuous-use environments. Increasing emphasis on process optimization and energy management in industrial operations is driving the adoption of gas tankless water heaters in this application segment.

Recent Developments

Recent developments in the gas tankless water heaters market highlight growing integration of smart controls, IoT connectivity, and energy-efficient designs that reduce operating costs and enhance user convenience. Manufacturers are focusing on modulating burners, remote diagnostics, and demand-driven heating to support sustainable building standards and retrofit projects. A key trend is rising adoption in multi-family residential and commercial retrofit applications, where continuous hot water delivery and lower energy consumption are critical, driving competitive differentiation and broader market penetration.

December 2024 : AquaTorch Industries introduced a new line of gas tankless water heaters with AI-powered energy efficiency modules, revolutionizing the market with energy-saving solutions
October 2024 : HeatSync Co. partnered with EcoFuel, fuel cell developers, to launch a hybrid gas tankless water heater. This product combines fuel cell technology with traditional heating mechanisms to achieve optimum performance
July 2024 : GreenFlow Technologies unveiled a series of compact gas tankless water heaters tailored for small apartments and office spaces, marking a significant shift in their product portfolio.

Impact of Industry Transitions on the Gas Tankless Water Heaters Market

As a core segment of the Consumer Electronics industry, the Gas Tankless Water Heaters market develops in line with broader industry shifts. Over recent years, transitions such as Increased Energy Efficiency and Technological Advancements have redefined priorities across the Consumer Electronics sector, influencing how the Gas Tankless Water Heaters market evolves in terms of demand, applications and competitive dynamics. These transitions highlight the structural changes shaping long-term growth opportunities.
01

Increased Energy Efficiency

The transition towards energyefficient appliances has significantly impacted the gas tankless water heater industry. With a growing focus on sustainable living and energy conservation, consumers are increasingly choosing gas tankless water heaters over conventional water heating solutions. These appliances demonstrate higher energyefficiency ratios, reducing greenhouse gas emissions and lowering utility bills, thereby making a noteworthy contribution towards a greener lifestyle. This transition has fostered innovation across manufacturers, prompting them to design and develop advanced, energysaving models that satisfy evolving consumer requirements while adhering to stringent environmental regulations.
02

Technological Advancements

The transition toward technologically advanced gas tankless water heaters is reshaping adoption patterns across residential, commercial, and light industrial sectors. Integration of WiFi connectivity, remote monitoring, and self-diagnostic systems has significantly improved operational visibility and maintenance efficiency for users and facility managers. For example, hotels and multi-family housing operators increasingly deploy multi-unit cascading systems with centralized digital controls to manage peak hot water demand while optimizing energy use. Interoperability with smart home and building management systems is also expanding use cases, particularly in modern residential developments and smart commercial buildings. This transition enhances user convenience, reduces downtime, and supports predictive maintenance, thereby increasing the overall value proposition and accelerating replacement of conventional water heating systems across connected infrastructure environments.